Take-Two takes $29.1 million Q1 hit

Slow holiday sales, acquisitions bite into the Grand Theft Auto publisher's bottom line; sales slightly better than expected.

Increasingly, the holiday sales season has become the focus of game publishers' release calendars. With shoppers eager to shower their favorite gamer with the latest releases, it is the prime time for companies to move their products en masse.

However, as is becoming increasingly clear, the 2005 holiday season left a lump of financial coal in many publishers' stockings. Few, though, saw their fortunes fall as rapidly as Take-Two Interactive. Today, the company announced that it lost $29.1 million during the first quarter of its 2006 financial year, which ran from November 2005 until January 2006.

Overall, Take-Two's net sales for the quarter were $265 million, above the company's previous guidance of $230-240 million. However, the figure was way down from $502.5 million it took in during the same period the year before. Of course, then the company was enjoying record-breaking sales of Grand Theft Auto: San Andreas, which was later recalled over the "Hot Coffee" sex-minigame scandal.

Ironically, Take-Two said the rereleased version of San Andreas, now just $19.99 for the PS2, was one of its two top games during the quarter. The other was another GTA game, Grand Theft Auto: Liberty City Stories for the PSP. Since it launched in October 2005, the latter title has remained the best-selling game for Sony's portable.

All Grand Theft Auto games are published under Take-Two's Rockstar Games label. In its earnings release, the company singled out the two top sellers of its other subbrand, 2K Games. They were Civilization IV, the latest addition to the popular PC strategy series, and the Xbox 360 version of NBA 2K6. According to the latest figures from NPD Funworld, the two titles sold nearly 429,000 and 70,000 copies on their respective platforms as of January.

Though it put on a brave face, Take-Two was likely disappointed by the performance of NBA 2K6--and the rest of its Xbox 360 launch lineup. The company bet big on Microsoft's new console, and rushed to release three games--Amped 3, NBA 2K6, and NHL 2K6--in time for its November 22 US debut. However, widespread shortages of the Xbox 360 continue to hamper sales of the platform to this day, no doubt frustrating publishers.

In a statement, CEO Paul Eibeler laid out his plan to turn Take-Two around. "We are working to manage through the console transition," he said. "Most importantly, we will continue to focus our development resources on creating great content and further leveraging our proprietary brands."

What brands would those be? Since the beginning of February, Take-Two has shipped 24: The Game (PS2) and the Xbox 360 version of College Hoops 2K6. During the rest of the quarter, which ends in April, it plans on shipping The Elder Scrolls IV: Oblivion (PC, Xbox 360), the budget-priced Midnight Club 3: DUB Edition REMIX (PS2, Xbox), Top Spin 2 (Xbox 360), the PS2 port of Grand Theft Auto: Liberty City Stories, and Major League Baseball 2K6 for the Xbox, Xbox 360, PSP, GameCube, and PlayStation 2.

During the remainder of its 2006 fiscal year, which ends on October 31, Take-Two plans on shipping Table Tennis (Xbox 360), Bully (PS2, Xbox), The Da Vinci Code (current-gen consoles, PC), Prey (Xbox 360, PC), Family Guy (current-gen consoles), Stronghold Legends (PC), and The Darkness (unnamed next-generation systems). It also plans on releasing two new PSP titles, including a second GTA game for the platform, and a mysterious "sequel of a Rockstar brand for a current-generation console system." For the fiscal year, the company plans on releasing more than 70 SKUs, or individual products.

In his statement, Eibeler also obliquely touched on another Take-Two expense--the cost of studio acquisitions. During its fiscal Q1 2006, the company made two major purchases, scooping up Civilization studio Firaxis and BioShock developer Irrational Games for $26.7 million and $11.8 million, respectively. "We're taking a hard look at every aspect of our business and are balancing the need to manage expenses while investing in creative resources and the infrastructure needed to support our diversification efforts," said Eibeler.

25 Comments

  • shadowz33

    Posted Mar 10, 2006 6:09 pm PT

    Some people dont think before they say something. " i hope take-two goes under, but i cant wait for Elder Scrolls" they have good and bad gamesjust like every company does. along with GTA which is their cash cow. i hope all people who make stupid comments lost their job because the company they worked for goes "under" must be easy to fling words around in a forum.

  • StupiDGeniuS423

    Posted Mar 9, 2006 9:24 pm PT

    the da vinci code?

    that will not be good first of all, and that will defenitely not be more family friendly. They can leave out the part talkinb about sex, but they cant take out religious references

  • Briantb_2008

    Posted Mar 9, 2006 6:49 pm PT

    Man there still racking in mad profits from that gta and still will for quite some time. Wait till the next one and you will see even higher record breaking

  • hsvclubsport_r8

    Posted Mar 8, 2006 5:46 pm PT

    how do you make a table tennis game exciting?

    >>add hot coffee

  • SavoyPrime

    Posted Mar 8, 2006 12:38 pm PT

    Damn, the 360 version of NBA 2K6 sold like crap! No wonder they haven't put a demo of the game on Live.

  • homsuplo75

    Posted Mar 8, 2006 9:27 am PT

    They obviously sold a whole lot more Civ IV than the NBA game. Maybe they should focus on strategy games that tend to have a higher following.

  • SturokBGD

    Posted Mar 8, 2006 6:29 am PT

    Stupid kids, not every gamer wants GTA-style games.

    Just because some of you aren't old enough to remember having fun with Konami Ping Pong back in the mid-80's, doesn't mean we all have to want to be 'gangsta'.

  • thefjk

    Posted Mar 8, 2006 6:12 am PT

    Yeah just make some games which aint gon give you law suits, then you'll get back on your feet!

  • chrisdojo

    Posted Mar 8, 2006 4:34 am PT

    hopefully they keep losing $$

  • jakeboudville

    Posted Mar 8, 2006 12:15 am PT

    interesting..

  • swanlord

    Posted Mar 7, 2006 9:18 pm PT

    if you put nekkid jap chicks in it bending over a table ill buy it in a heart beat

  • trogdorchief01

    Posted Mar 7, 2006 7:35 pm PT

    how do you make a table tennis game exciting?

  • NeoJedi

    Posted Mar 7, 2006 7:28 pm PT

    Gun Pong!

  • Mindphaser

    Posted Mar 7, 2006 4:08 pm PT

    I'd much rather play Table Tennis than some idiotic GTA style game aimed at inner city gangsters. GTA is fun for about 20 minutes, then it gets really really old. Ping pong is fun forever.

  • dwmorrow

    Posted Mar 7, 2006 2:52 pm PT

    Don't worry, investors - Table Tennis is gonna save Take-Two's bacon. Yeah, right.

  • Lauryn2000

    Posted Mar 7, 2006 2:36 pm PT

    Table Tennis aka Ping Pong the next big installment *sigh* wonder if it will be M for Mature?

  • Mp5slipknot

    Posted Mar 7, 2006 2:18 pm PT

    Umm BigD, GTA is already on the Xbox so why not also the 360?

  • BigD

    Posted Mar 7, 2006 2:12 pm PT

    Will MS use its money to steal the GTA brand to the 360? They should if they can....

  • nuit_b

    Posted Mar 7, 2006 1:51 pm PT

    I dont really want to ever see a company go out of business, because people will lose their jobs. But this company along with rockstar games need to go under.

  • XtReMeGaMeR4eVa

    Posted Mar 7, 2006 1:50 pm PT

    BTW who the hell is gonna buy a table tennis game? Not the GTA crowd that's for sure.

  • Kingofunrealuk

    Posted Mar 7, 2006 1:49 pm PT

    Family image +1 for Rockstar!
    It probably has a dodgy story about the drugs, sex and rock and roll behind the players... obviously.

  • XtReMeGaMeR4eVa

    Posted Mar 7, 2006 1:49 pm PT

    LOL MIDNIGHT CLUB DUB EDITION REMIX???? HAHAH that's gonna sell great around here (live near oakland). I remember when the "first" version came out they had trailers of the game running in my EB store I work at and all it showed was huge chrome rims rolling up to the start line. You know what the response was??? "OH @#$% BLOOD Ima get that. Look at dem DUBS blood." LOL they didn't even have to show the cars RACING and they already had sold at least 15-20 copies. I hate this "urbanization" of the industry.

  • o_sausage

    Posted Mar 7, 2006 1:46 pm PT

    why ping pong

  • puppiemaster

    Posted Mar 7, 2006 1:43 pm PT

    Need a few new GTA's or just port them to the gamecube will make a few bucks

  • Racerchops

    Posted Mar 7, 2006 1:41 pm PT

    ping pong FTW

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